May 145 min read

InsurTech Ohio Spotlight with Sean Bourgeois

Sean Bourgeois is the Founder and CEO at fuse, which aims to be the Bloomberg Terminal for commercial insurance combining market-wide instant messaging, market data and electronic RFQs. Sean was interviewed by Andrew Daniels, Co-Founder and President at CrashBay and Founder and Managing Director at InsurTech Ohio.

Sean, can you tell us about your journey to retail mid-market commercial insurance?

“I started my career as a reinsurance underwriter, and I spent eight years learning property and casualty reinsurance on a global scale. It was like school in the world of P&C insurance and reinsurance, but I left the industry in the late nineties. I've been in technology ever since, and most of that tech career has been based on marketplace design, primarily at AdTech companies. How do you clear markets efficiently with technology? How do you improve price discovery? As I spent time there, the entire advertising industry changed, becoming almost entirely programmatic.

I wondered if there was a way to bring technology to the reinsurance world to help with competitive price discovery in a way that takes into account everybody's constraints. Then I spent time mapping that out, talking to people, building a prototype and raising capital for that company. We launched Tremor in 2018, and over the years, we built it to a marketplace where there were about 150 reinsurers, 15 cedents and about four billion of risk traded. We made a nice dent in the universe, and we sold Tremor this past summer.

Fuse came from a couple of things with Tremor that we didn't have or do. One thing we didn’t have was a real, persistent marketplace where the market was always there. Ours was an episodic market that would trade infrequently. I wondered, ‘Where could that be done in the insurance reinsurance spectrum?’ The other thing was we were dealing with really high-stakes trades with little time constraints. The technology we bought helped to give the buyer a true sense of the market and what's possible in terms of price. At the same time, there was still a limitation in terms of how far that technology could go for them. The limitation from our perspective was that we knew because there were such high-value infrequent transactions, it would be tough to fully integrate it and get full buy-in from the brokerage community. An analog in capital markets might be dropping this technology into IPOs. This same technology we built for reinsurance carries that same problem but multiplied even more. It's not even an annual; it's a once-in-a-lifetime transaction, super valuable and very profitable for bankers. It would be tough to bring it in there.

Long story short, fuse is trying to bring technologies that are commonplace in capital markets to create a persistent market that has much more dynamic trading, resulting in more transactions versus relationship type trades with speed.”

Having spent time in the traditional tech space, how does that experience help you think differently about the insurance industry and how to solve some of these problems?

“You see a lot in the industry that folks live for their careers. There's an institutional memory of how everything is done, and it's passed down through the fire stories. It’s an unknown concept in insurance and reinsurance in the sense of true price efficiency. What does that really mean, supply and demand? What’s the true equilibrium? The market doesn't think about it that way in detailed terms, whereas in the capital markets and even in the ad tech market, that's all they think about. It’s driven by hard economics, complex optimization and math to make the tech work and market efficient.

The trick is to avoid a shotgun approach where you're blasting that into the market, and people have to accept it. It's so new and different. It takes time to educate the market and bring them around, whether that's price discovery for Tremor or what we're trying to do in terms of process improvement with fuse. The key is having a different perspective and seeing things that have worked well in other markets. It's not just an idea that you hope will work. It has great precedent, and having spent time outside the market and coming into the market, it's a lot easier to do that. We have no baggage of protocol from history. We're willing to be able to come at problems differently using examples that have been successful in the past.”

Why is communication important in the commercial insurance industry?

“The unique thing about commercial insurance communication, in particular the middle market, is that every carrier will still have a small set of questions that they're going to ask for almost every placement. They're all going to have different interests and parameters of the offer. That requires this conversation every time. It's not an extensive conversation. It's not like a treaty reinsurance placement that can take three months. It's a matter of days to get a set of questions answered from all the carriers. Sometimes it's the same question every time, but sometimes it's different.

The challenge is that a broker needs to come back to their client as soon as they can with the best terms on offer. This is the renewal market. I'm going to text one, email the other carrier, carrier pigeon to another, and I have to figure out how to bring all of that together and do it efficiently. The communication problem is the multichannel communication that happens every time. Nobody likes the time that it takes to make these things happen.

The last thing I’ll say is that once a submission goes from a broker to a carrier, the follow-up is the Q&A post submission which causes the problem. They’re not heavily complicated questions, but they’re questions perfectly suited to a market-wide instant messenger application. This allows a single pane of glass managing communication with multiple carriers individually but at the same time in real time for a risk placement. It's not going to require a lengthy explanation or lots of documents. It's a document and answer. Doing that for the mid-market is really nice with the modern messaging communication capabilities.”

What are some of the problems that still need to be addressed in this part of the industry?

“There are some longer-term problems around risk triage per carrier to be solved, so they're getting exactly what they want but without requiring a huge lift on their part to do what they want. That's a constant challenge from the carrier's perspective. Most carriers have a lot of pain there, especially mid-market where there's reasonable flow and decent volume. That's one side of the market. The other side of the market is figuring out how to capture the right amount of data upfront from a submission without overloading the broker or client.

That's the tempting thing that folks have tried to solve first, and our view is that it’s something you should solve second. What you solve first is the day-to-day block. Tackle something that takes four days, and make it four hours. In terms of compressing communications, give the market better access to data to make better decisions on markets to speak with and allow them to express what they want to propose, so it's easier for a broker to matrix and present back to their client. Those things sit in the middle longer term. Once that's going, you can imagine maybe stepping into better risk triage in a way that makes sense for each line of business and better capture data and full end-to-end integration. Over time, it will evolve, and you will already have this capability of managing your day-to-day at the core. It will be natural to add that on.”